Wise Accounts Blog

Keeping your refund in the bank for a rainy day sounds like wisdom but it's bad for two reasons: first the interest paid on savings accounts is lousy, second because it is the obvious thing to do it does not challenge your gray matter.

There are times in life where you have to behave like a business person and this is one of those times. If you can be trusted in small things, you will be trusted in bigger things. This biblical truth can be taught to young and older adults alike. It means that you bear the responsibility for the stewardship of your resources.

The way you are going to discharge yourself of that responsibility will ultimately determine your future. It has to do with your values. People send their time and energy (meaning resources, aka money) around the issues that are dear to them.

Values are often out of your immediate reach and that is where goal setting comes to play. You don't stumble randomly by accident onto a goal - you strive hard to get there because whatever is a worthwhile endeavour will attract opposition.

Unlike time which has to be consumed in the now, money can be stored for a later day. Just like water flowing into and draining out of a pool, money goes in and out of your hands and it takes some scrutiny to figure out if you are better off (making a profit) or worse off (making a loss) at the end of the week, month or year...

One tool to keep this in check is the cash flow report. By collating all your regular expenses on one hand and all your earnings on the other hand you can project into the future what your bank balance might look like, a month, 6 months or a year from now.

Knowing what your saving ability is today will have an impact on how to invest your tax refund. Some investments will lock you in for a given period of time (six months, a year, 5 years...) Some investments take care of themselves while others require hands on supervision. The basic law is: the higher the return, the higher the risk.

The way you cope with risk depends on your age (ability to replace what was lost - whether you are working or not) and your level of involvement (sleep on it until redemption time, versus daily check of your stocks in the share market). If the stock market interests you check out Trading Pal an automated trading system which you can use to compare against your own performance.

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